PPP Loan Waiver Tips for New EZ Applications
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The Small Business Association (SBA) has clarified the rules surrounding the Paycheck Protection Program (PPP) loan forgiveness. Until recently, many small business owners I spoke with were unsure of what the process would look like and how they might request the cancellation of their loans.
Are you eligible to use the EZ PPP Loan Discount Application?
Two requests must be completed and submitted when applying for a Paycheck Protection Program Loan Remission. These are the 3508 requests and the new 3508EZ form. If you meet at least one of the three conditions below, you may be able to complete and submit the EZ PPP Loan forgiveness request.
1) You are self-employed and have no employee.
2) You have not reduced your employees’ hours or reduced their wages or salaries by more than 25%.
3) You have suffered declines in activity following health directives related to Coronavirus (COVID-19) AND did not reduce the wages or salaries of your employees by more than 25%.
We encourage you to understand the Checklist for using SBA Form 3508EZ. This checklist will give you more information on the steps you need to take as a business owner to make sure your PPP loan forgiveness application is approved.
When given the option, I think most business owners will choose to use the EZ app. Why? Applying for EZ PPP loan forgiveness requires fewer calculations and less documentation for eligible borrowers.
In order for business owners not to meet at least one of the three requirements listed above, so they cannot use Form 3508EZ, please see the update PPP 3508 loan forgiveness request form and the revised worksheet in Appendix A. This app is a bit heavier but still worth the effort.
Tips for requesting a PPP loan forgiveness
Whichever form you use, we recommend that you track your eligible salary and non-salary costs as you incur them. Also know what documents you will need to submit in order to get your PPP loan canceled. A complete list of necessary documents can be found here. You will also need to understand how to account for payments to employees on leave, owner-employees and the self-employed. If you have received a PPP loan, this might be a great time to seek help from a trusted financial planner and chartered accountant (CPA). They can guide you through the process of canceling your Paycheck Protection Program loan.
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PPP lenders should incorporate the latest updates from the SBA’s PPP loan remission as they prepare to begin accepting remission requests online. I would expect the loan cancellation process to begin in the next few months. In a perfect world, your lender will contact you to explain how to apply for a PPP loan forgiveness. However, you need to be proactive as not all of them may make the process as easy as possible.
It is still unclear exactly how the application process will work. Banks are pushing back the amount of work they’ll have to do to clear those demands and cancel loans. More work for them will mean less benefit from this program, not to mention more hassle for business owners.